Mr. LAWRENCE. We are discussing the bills under consideration, sir.

Mr. WELCH. You stated that you have several amendments that you desire to offer to the Fair Labor Standards Act. I was wondering if you had in mind the present law or the bills under consideration? Mr. LAWRENCE. I am going to try to discuss the bills under consideration and give our objections to the amendments proposed sir, and then to point out, as I pointed out, the difficulties we have been under.

Mr. WELCH. Your proposed amendments would apply to the bills under consideration and not the written law?

Mr. LAWRENCE. They are addressed to the written law, just as these bills under consideration are, as amendments.

Mr. PATTERSON. I know the bills are amendments, but would you mention the specific bill which you are attempting to amend? That is what Mr. Welch wanted to know. He knows that all the bills are amendments to the present act. We know that.

Mr. LAWRENCE. Í have a sort of an anlysis, sir, but it would be difficult to give it. I could straighten it out later. Of course, in the Senate we have one bill. Would it be all right if I addressed myself to the type of amendment?

Mr. PATTERSON. The only point I want to make is that it would not help this committee very much if you are not addressing yourself to specific improvements in specific bills. You are against all the bills, I presume.

Mr. LAWRENCE. The provisions in them; yes, sir.

Mr. PATTERSON. In all the bills.

Mr. FISHER. Do you take the position that the suggested amendments that you propose to discuss are germane to the pending bills? Mr. LAWRENCE. That is correct, sir.

Before concluding, I should like to read into this record the statement of Peter T. Beardsley, an attorney employed by American Trucking Associations, Inc., with regard to these proposals to amend the Fair Labor Standards Act. Mr. Beardsley had intended to testify himself, but was precluded from so doing by virtue of the rule established by the committee limiting testimony to one witness from each organization. [Reading:]

STATEMENT OF PETER T. BEARDSLEY

Mr. Chairman and members of the committee, my name is Peter T. Beardsley. I am an attorney employed by American Trucking Associations, Inc., the only national organization representing the interests of all motor carriers of property, both for hire and private. Our offices are located at 1424 Sixteenth Street NW., Washington, D. C.

The first subject I should like to discuss is the need for amending section 7 of the act. The actual wording of this proposed amendment, and the others which we suggest be made, I am reserving till later and will treat them all together.

Mr. Lawrence has testified as to the economic effect upon our industry of the increased minimum wage proposed by these bills. But whether or not it is ultimately decided that the minimum should be increased, we believe section 7 of the act should be amended to restore Congress' original intent; which, so far as this phase of the legislation is concerned, was limited to placing a floor under

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wage payments beneath which employers might not go in compensating employees subject to the act.

We believe this intention of Congress was very clearly disclosed by Mrs Norton, sponsor of the legislation in the House, in a statement made at the time Senate bill (S. 2475) was before the House for consideration. Mrs. Norton said: "Let it be understood right here that this does not in any sense compel any person who is paying more than 40 cents an hour or working his employees less than 40 hours a week to do otherwise. We are not interested in that employer for the purposes of this bill. I say this because this question has been continually raised” (83 Congressional Record, 7280).

You will recall that the Fair Labor Standards Acts represents the work of a conference committee, called together when it was found impossible to reconcile the provisions of the bills passed by the House and Senate. Mrs. Norton's statement was made prior to the development by the conference committee of a new bill which was finally enacted into law. We cannot suppose that the conference committee intentionally reported a bill which neglected completely the will of Congress as expressed in Mrs. Norton's statement just referred to.

Mrs. Norton's statement, it seems to us, clearly implied that employers whose weekly wage aggregate at least the minimum provided in the act, including one and one-half times such minimum for any overtime worked, need have no fear for running afoul of the stiff penalty provisions provided for violators.

In view of Mrs. Norton's statement the Supreme Court's holding in Overnight Motor Transportation Co., Inc., v. Missel (316 U. S. 572), that the act did reach employers whose wages were higher than the minimum provided in the act took many businessmen completely by surprise and necessitated their expenditure of large sums of money in past due overtime, liquidated damages, and attorneys' fees resulting from their innocent violation.

The Fair Labor Standards Act was ostensibly intended to aid underprivileged employees who, because of economic necessity, were unable to maintain minimum standards of living Was it intended to provide a windfall for a bookkeeper earning in excess of $5,000 per year or oil-field workers with earnings as high as $11 per day? Certainly we think it clear that even a casual reading of the history of this social legislation can lead only to a contrary conclusion. But until the act is amended to express what seems to have been Congress original intent, this is the situation which will prevail. In view of the extreme uncertainty in many industries as to whether the act is applicable, employers are naturally encouraged to pay low wages in order to keep liquidated damages as small as possible should the act ultimately be held to apply.

The paradox created by the Supreme Court's construction of the act becomes more apparent with each passing day. An act of Congress designed to penalize the payment of substandard wages has been so construed by the courts that the higher the wage paid, the greater the penalty incurred in case of violation, no matter how innocent, and regardless of good faith effort on the part of the employer to comply with the act!

Congress, as a matter of simple equity, should take immediate steps to remedy this situation which readily is seen to work at cross purposes with the intent behind the original legislation.

PROPOSED AMENDMENT OF SECTION 8

Next, I should like to talk about the amendment to section 8 proposed by each of the bills except Mrs. Norton's.

As we read the bills, the Administrator of the Wage and Hour Division of the Department of Labor would be given authority to determine "interrelated job classifications" within industries subject to the act and establish minimum wage rates applicable thereto.

The Supreme Court, in U. S. v. Darby (312 U. S. 100), sustained the constitutionality of the Fair Labor Standards Act on the ground that Congress may exercise its power over interstate commerce to prevent the spreading and perpetuating of substandard labor conditions. The court said:

"The motive and purpose of the present regulation is plainly to make effective the congressional conception of public policy that interstate commerce should not be made the instrument of competition in the distribution of goods produced under substandard labor conditions

**

Congress justified its enactment of the Fair Labor Standards Act on the desire to eliminate substandard labor conditions in interstate commerce. But the justification for such a radical change in congressional policy as is proposed in most of these bills, by which literally millions of skilled employees would be

classified and their minimum wage established, without any resort whatsoever to the collective bargaining process, is beyond our comprehension.

Ordinarily, Congress does not pass legislation unless there is a strong demand or a clear necessity therefor. So far as we know, there has been no demand made and certainly no need shown for legislation such as the amendment proposed to section 8 of the act by these bills.

More and more, Congress has come to rely upon the collective bargaining process as the most desirable medium for the establishment of wage rates, job classifications and all the other phases of industrial relations which are ordinarily the subject matter of contracts between employers and employees, or their unions. Congress has passed many laws guaranteeing to employees the right of collective bargaining. The Railway Labor Act of 1926, The NorrisLaGuardia Act of 1932, and the National Labor Relations Act represent outstanding examples of such legislation.

We are convinced that the amendment to section 8 of the act proposed by these bills would constitute a very long step away from collective bargaining and toward State socialism. We are very much afraid that, having assumed the power to specify minimum wages, the Government would ultimately find it necessary to establish maximums. At any rate, once minimum wages had been set for all employees in every industrial activity of any size, "collective bargaining" would become little more than an empty phrase. Naturally, thousands of contracts made in good faith by labor and management, through the collective bargaining process, specifying job classifications and wage rates applying thereto, would be abrogated should the proposed amendment to section 8 be adopted.

SECTION 13 (B) EXEMPTION

We turn next to a discussion of the exemption provisions of section 13 (b) of the Fair Labor Standards Act and the desirability of amending the law to restore what we believe was Congress' original intent, that is, to place motor carriers on an equal footing with their chief competitors, the railroads. We note that one of the bills, H. R. 3719, would repeal section 13 of the act, eliminating all exemptions. Two of the bills, H. R. 3837 and H. R. 3844, would leave the present partial exemption applying to motor carriers undisturbed while three bills, H. R. 3914, S. R. 3928, and H. R. 4222, would almost entirely emasculate it.

We believe the present exemption provisions of section 13 (b) of the act, as construed by the Surpeme Court, clearly discriminate against motor carriers in favor of the railroads.

When the Fair Labor Standards Act was first passed, it was assumed that all employees of for-hire motor carriers and employees of private motor carriers whose duties affected safety of operation were subject to the jurisdiction of the Interstate Commerce Commission and therefore exempt from the overtime provisions of section 7. Railroad employees are, of course, not subject to those provisions. However, the Commission interpreted the applicable provisions of the law to mean that its jurisdiction over employees of all motor carriers was limited to those whose duties affected safety of operation (Ex Parte No. MC-28—Jurisdiction Over Employees of Common, Contract, and Private Motor Carriers Under Section 204 (a) of Motor Carrier Act, 1935, 13 M. C. C. 481). Our industry was successful in having the Commission's decision reversed by a three-judge statutory court sitting in the District of Columbia. However, the Supreme Court, 5 to 4, reversed the decision of the lower court (United States v. American Trucking Associations, Inc., 310 U. S. 534), with the result that motor carriers who had supposed they had been given the same treatment by Congress as their competitors, the rails, found themselves at a competitive disadvantage of no small proportions.

By the Transportation Act of 1940, Congress adopted as "the national transportation policy" "fair and impartial regulation of all modes of transportation" subject to the Interstate Commerce Act, "so administered as to recognize and preserve the inherent advantages of each.'

The average motor carrier is a small businessman. On the contrary, the railroads represent just about the largest industrial enterprises existing today. The rails, easily capable of complying with the overtime provisions of the act, are relieved of the necessity therefor; motor carriers, many of whom cannot pay the claims which have accrued against them under the act and remain solvent, are required to observe the provisions in question or incur heavy penalties. Certainly transportation by motor vehicle has some inherent advantages or our industry could not exist at all. But we cannot believe that requiring the motor carrier to stringently observe the overtime provisions of the act, while imposing

no such requirement on his rail competitors, carries out the congressional policy of recognition and preservation of such inherent advantages. We leave it to this committee to determine whether such treatment constitutes the "fair and impartial" regulation required by the national transporation policy.

In addition to the competitive disadvantages arising from the Supreme Court's interpretation of the exemption provisions of section 13 (b), motor carriers are constantly faced with actions brought by their employees, or the Administrator, asking the courts to hold that the jurisdiction which the Commission has asserted, limited as it is, should be even further restricted.

After the Supreme Court's opinion in U. S. v. American Trucking Associations, Inc., previously referred to, the Commission, after exhaustive hearings, concluded that helpers, loaders, and mechanics, in addition to drivers, employed by interstate motor carriers are subject to its jurisdiction (Er Parte No. MC-2-In the Matter of Maximum Hours of Service of Motor Carrier Employees, 28 MCC 125). It would seem to follow that the four classes of employees would be exempt under section 13 (b) from the overtime provisions of the Fair Labor Standards Act.

The Administrator, had he so desired, could have intervened in the Commission hearing, and if dissatisfied with its decision, appealed to a three-judge court to reverse it. This he did not choose to do. In fact, to our knowledge, the Commission's decision has never been directly attacked in any court. But it has been the subject of collateral attack, both by the Administrator and motor carrier employees, on innumerable occasions. Surprisingly, too, some of these attacks have been successful, although most of the courts have recognized the wellknown rule that decisions of an administrative agency, made within the scope of its authority and supported by evidence, are conclusive on the courts (Swift & Co. v. U. S., 316 U. S. 216, 231).

There is no power whatsover, either in the Fair Labor Standards Act or the Interstate Commerce Act, giving the Administrator authority to interpret the exemption provisions of section 13 (b) of the former act, applying to employees of motor carriers. Despite the lack of this power, the Administrator has chosen to issue his so-called Interpretative Bulletin No. 9 which purports to indicate the course which he will follow in the performance of his administrative duties. Although he admits that the bulletin is not binding, some of the Federal trial courts seem to have adopted the philosophy behind it; others have followed the Administrator's "interpretations" to the letter.

In the third issue of his Bulletin No. 9, the Administrator contended that employees theretofore held by the Commission to be subject to its jurisdiction could not be considered exempt from the overtime provisions of the act unless they devoted at least 80 percent of their time to the very duties leading to assertion of jurisdiction by the Commission. In other words, despite the fact that drivers had been declared subject to its jurisdiction by the Commission, according to the Administrator's interpretation, a driver who spent 75 percent of his time driving and the other 25 percent washing and greasing his truck in any one workweek would not be subject to Interstate Commerce Commission jurisdiction for such week.

The present issue of Bulletin No. 9, which is the fifth revision, lowers the figure by which to determine whether an employee declared by the Commission to be subject to its jurisdiction, is actually so subject, from 80 percent to 51 percent, i. e., the greater part of the workweek. But another revision seems to be in order. The Second Circuit Court of Appeals has recently held that if any employee devotes 1 day a week to exempt activities, he is exempt from the provisions of section 7 for that week (Walling v. Comet Carriers, Inc., 8 Wage and Hour Reporter 883, decided Aug. 17, 1945).

The exemption provisions of section 13 (b) should be amended to place the motor carrier once more on a fair competitive basis with the railroads and other carriers. Only thus can the fair and impartial regulation required by the national transportation policy be achieved and the inherent advantages of motor transport be recognized and preserved.

DISTINCTION BETWEEN LOCAL AND NATIONAL ACTIVITIES SHOULD BE MAINTAINED

The predicament in which the interastate motor carrier finds himself today is also worthy of the consideration of this committee. It seems rather clear that the intrastate carrier, who does not transport goods beyond State lines, is not engaged in "commerce" within the meaning of the Fair Labor Standards Act. But the inclusion of the word "transporting" in the congressional definition of

"production" seems, according to the court decisions so far rendered, to have been intended to cover the intrastate motor carrier. This point has not been clearly passed upon by the Supreme Court, and we therefore cannot be absolutely certain at this time that intrastate motor carriers will be ultimately held to be covered by the act.

At the time when the conference report on the compromise bill which later became the Fair Labor Standards Act was submitted, Congressman Schneider, of Wisconsin, then a member of the House Labor Committee, said:

"It must be repeated, however, to avoid any misunderstanding of the bill, that it does not in any way, shape, or form affect intrastate or purely local or State business" (83 Congressional Record, 9260).

The courts, generally, in marked contrast with Congressman Schneider's statement, are construing the term "produced" as used in the act so broadly as to leave very little room for any activity local enough to escape the coverage of the act. In the recent case of Walling v. Griffin Cartage Co., decided September 5, 1945, the United States District Court for the Eastern District of Michigan held an intrastate motor carrier, 95 percent of whose business was the transportation of castings, forgings, and machine parts for and between two or three Detroit plants, subject to the act. The court, saying that "it is seemingly a stretch of the imagination to even consider that carting goods from one place to another in Wayne County can be 'producing,'" nevertheless held such transportation to constitute production within the meaning of the act and that the employer was in violation.

Now that the Administration has marked the path it may reasonably be expected that the employees of the concern involved will avail themselves of the golden opportunity to pick up some "easy money."

It is plain that Congress, in its enactment of the Motor Carrier Act, intended to leave the regulation of intrastate motor carriers to the States. Section 202 (b) of part II of the Interstate Commerce Act (formerly the Motor Carrier Act) provides:

"Nothing in this part shall be construed to affect the powers of taxation of the several States or to authorize a motor carrier to do an intrastate business on the highways of any State, or to interfere with the exclusive exercise by each State of the power of regulation of intrastate commerce by motor carriers on the highways thereof."

Section 216 (e) of the Interstate Commerce Act unqualifiedly reserves in the States the power to prescribe and regulate rates, fares, or charges for intrastate transportation, or for any service connected therewith.

Congress, by these provisions of the Interstate Commerce Act, has recognized the real distinction between local and national activity so far as motor carriage is concerned. But the construction placed by the court in the Griffin case upon the term "produced" completely negates any such distinction. We can find no evidence from the congressional debates preceding the enactment of the Fair Labor Standards Act of any intent to so radically depart from its previous conception of national, as distinguished from local, activities. On the contrary, the statement of Congressman Schneider seems to us to be strong evidence that Congress did not really intend to cover such activities as those involved in the Griffin case.

Congress should correct the inequity under which the intrastate motor carrier operates. He should not be subject, on the one hand, to State regulation as to his rates and charges, hours of service, and other phases of his operation, and on the other, required to comply with the complicated and ambiguous provisions of Federal legislation ostensibly intended to reach activities in interstate commerce only.

DESIRABILITY OF A LIMITATIONS PERIOD

Next, I should like to discuss the desirability of amending the Fair Labor Standards Act to provide a limitations period to apply to causes of action accruing from the failure to observe the provisions of section 6 or 7 of the act. We note that four of the bills, H. R. 3719, H. R. 3914, H. R. 3928, and H. R. 4222, provide such an amendment, and in each case the period proposed is 5 years.

We believe the necessity of providing a Federal limitation upon actions arising under the Fair Labor Standards Act is so apparent as to require very little elaboration. We cannot believe, however, that the period proposed by the bills, that is, 5 years, would promote substantial justice. In view of the confused state of the law and the very real difficulty of determining in many instances just which employees, if any, are covered by the act, a period of 5 years would